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India Must Lift Rice Export Ban to Lower Prices, Official Says

India, the second-biggest producer of rice, must end a ban on exports to help pare prices of Asia’s most important staple, according to a member of the nation’s top planning body.

“India not exporting is hurting a lot of other people in the world,” Abhijit Sen, a member of the Planning Commission, said in an interview in New Delhi yesterday. “We should allow exports as it will bring down world prices.”

Lifting the two-year restriction may lead to shipments of as much as 500,000 metric tons of parboiled rice to Bangladesh, the Middle East, South Africa and Nigeria, pressuring prices in Thailand, the top supplier, according to Emmsons International Ltd., a grain exporter in New Delhi.

“Exports will definitely create a problem for Thailand,” said Rakesh Singh, a trader at Emmsons.

Thai rice prices, the benchmark for Asia, dropped to the lowest level in more than two years, the Thai Rice Exporters Association said this week. The price of 100-percent grade-B white rice fell 1.1 percent to $458 a ton from a week earlier, the lowest level since January 2008, according to data from the association’s website.

Rice futures in Chicago, which climbed to $16.27 per 100 pounds last December on concern that India may become a net importer for the first time in more than two decades, traded at $10.36 at 2:17 p.m. Mumbai time.

India banned exports of all grades, except the aromatic Basmati variety, in April 2008, to increase domestic supplies. The restriction persists as a drought in 2009 pared production by 10 percent to 89.13 million tons in the year ended June 30, according to the farm ministry.

Plantings Increase

The government may permit exports in limited quantities as output of monsoon-sown crops including rice, cotton and oilseeds this season will be higher than a year ago because of increased plantings, Farm Minister Sharad Pawar said July 16.

“The decision to allow exports couldn’t be taken last year because of drought and even this year there’s a certain hesitation on allowing export as rainfall figures still suggest that we are below normal,” the Planning Commission’s Sen said.

The monsoon, the main source of irrigation for the nation’s 235 million farmers, is 12 percent below the long-period average since June 1, according to the weather office. Still, total food grain output may rise 6 percent to 230 million tons in the year to March 31, as the La Nina weather event brings more rain after a weak start to the monsoon season, Normura Holdings Inc. said in a report on July 21.

“We have enough supplies for exports,” trader Singh said.

India’s rice reserves on July 1 totaled 24.26 million tons, more than twice the buffer norm of 9.8 million tons, according to data compiled by state-owned Food Corp. of India.

The Planning Commission is a state agency that sets growth and spending targets.

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